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 Claiming business expenses in your tax filings is one of the most common areas where you can get into trouble with HMRC. Many people overclaim their business expenses, only to find that some of their supposed expenses are not eligible, leaving them with an unexpected surprise bill to repay. There are also some myths surrounding what can and can't be claimed, so read on to make sure that you're not losing out on claimable expenses.

 

Business trips are one of the most misunderstood expense claims, because it's all too easy to mix business and pleasure on a single trip. If you set out for a holiday and find a chance to get some work done, you're still not able to suddenly turn around and treat the entire expense as a business trip. The primary purpose of the days you're spending away are the core issue, so it's important to have that good and clear at the outset.

 

By the same token, if you're away on a primarily business trip and get the chance for some leisure and relaxation, that doesn't invalidate the business nature of the trip. The fact that you get a few fringe benefits along the way doesn't change the reason you went in the first place, so as long as you keep proper receipts for the business-related aspects you should be fine.

 

Many people believe that mixing business and pleasure cancels out the business nature of the trip, but as we've seen above that's not entirely true. If you were to take an extra day or two on the end of a business trip to see the local sights, you can still claim the business portion of the trip. Simply document exactly what happened, which days were business and which days were pleasure, and keep all the related receipts.

 

The other often misclaimed sector of business expenses is food and entertainment. Wining and dining clients (and employees, if you have any) is a great way to build contacts and keep your business strong, but you have to be careful about the way you handle the claims.

 

As a rule, non-staff entertaining is not allowable for corporation tax purposes.  However that doesn’t mean they can’t still be put through the company as a cost but you need to ensure that there is no personal tax benefit in kind impact on the member of staff taking the clients out.

 

If you're entertaining employees, you're allowed to claim £150 per year for each employee.  Even if you're the only one in the company, this claim still applies. 

 

Many self-employed individuals and small businesses lose out each year on potential savings due to confusion about what's allowed, but there are many other unexpected deductions that you may be able to claim with the help of a knowledgeable accountant. It's worth being sure that you're not overpaying HMRC!